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Paying Your Secured Loan Off Early: The Home Equity Loan Closing Cost

Home equity
loans are a great way of borrowing to consolidate debts, pay for a one-off
purchase or to fund improvements to your home. They let you borrow against the
equity in your home and can be spread over a long term.

However, not all
home equity loans will run their full course. There are lots of reasons why you
may want to repay your loan early. We examine these and the home equity loan
closing cost.

What Is a Home Equity Loan?

If you are a
homeowner, you may well have equity in your home. Your equity is the difference
between the value of your property and any mortgages or loans secured on it. For
example, if you home is worth £175,000 and you have an outstanding mortgage of
£100,000, your equity is £75,000.

A home equity
loan is a loan that is secured on your home and allows you to borrow some or
all of this equity. It is generally separate from your main mortgage which is
why this type of loan is often called a ‘second mortgage’. As with a mortgage,
the lender will take a legal ‘charge’ over your home as security.

You can use a
home equity loan for almost any purpose including paying for a one-off item
such as a new car, paying for home improvements or consolidating other debts.

Why Might You Want to Pay Back Your Home Equity Loan Early?

You can
typically take a home equity loan over a term of between 3 and 25 years. However,
there may be lots of reasons why you want to repay your homeowner loan before
the end of the term.

Firstly, you may
decide that you want to sell your home. As a home equity loan is secured on
your property, the loan has to be repaid when you complete a sale. Just as your
mortgage has to be redeemed at that time, your home equity loan must also be
repaid. Even if you move house and take out another loan, the secured loan on
your property must be repaid when you sell.

In addition, you
may find another way of repaying your home equity loan. Perhaps you manage to
arrange a low rate remortgage which incorporates the homeowner loan and you
want to pay it back early. Or, you may have a savings plan, bonus from
employment, pension lump sum, investment maturity or inheritance that means you
have a capital sum that you can use to repay the loan in full.

The Home Equity Loan Closing Cost

Most home equity
loans are regulated by the Consumer Credit Act. This means that there are
limits to any penalties (or ‘early repayment charges’) that apply when you pay
back a home equity loan early.

You should check
the specific terms and conditions with your own lender, but you will typically
pay no more than 1-2 months interest as a charge when you repay your secured
loan early. If you are able to provide 1 or 2 months written notice of your
intention to repay the loan you may avoid paying any interest charges at all.

Any home equity
loan closing cost that is charged will normally be added to the settlement
figure that you are quoted by your lender.

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Rates from 4.5% APRC to 65.2% APRC are available - the highest rate is for customers with severe credit problems. Loans available from 1-25 years. TYPICAL 10.9% APRC variable. Calls may be recorded for training purposes. The third party lender or broker may charge a fee of 0% up to 15% on your loan.

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How it works:

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THINK CAREFULLY BEFORE SECURING OTHER DEBTS AGAINST YOUR HOME. YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON A MORTGAGE OR ANY OTHER DEBT SECURED ON IT.

HomeEquityLoans.co.uk are a broker and not a lender who refer customers to other brokers or lenders that are authorised and regulated by the Financial Conduct Authority. HomeEquityLoans.co.uk is a trading name of Advantage Leads Limited. Authorised and regulated by the Financial Conduct Authority: 652937. Registered address: 94-96 Saltergate, Chesterfield S40 1LG. Registered in England and Wales: 9123083. Data Protection: ZA100334.

Loan details published on this site are for information purposes only and do not constitute financial advice. At HomeEquityLoans.co.uk we do not give advice. HomeEquityLoans.co.uk is an Introducer not a lender or broker. On completion of our form, we introduce you to one of our authorised loan brokers. We will use the contact details you have given to make this introduction and may receive compensation from our broker partners for this introduction. A loan adviser from our broker partner will contact you by telephone. During that telephone call, the loan adviser will discuss your options in more detail. During this call, and other subsequent communication, you will be dealing with our broker partner and not HomeEquityLoans.co.uk. All solutions are subject to acceptance and eligibility. Further conditions will apply and calls are recorded for your protection. Initial advice is always free, however, if you enter into a loan agreement via one of our partners companies, fees may apply; these are made clear by the adviser and also in the documentation you receive. Full details will be discussed prior to entering into any loan agreement and alternative options may be offered, if considered to be in your best interest. HomeEquityLoans.co.uk partners are all authorised and regulated by the Financial Conduct Authority and comply with their rules and principles of business.